UPDATE 1-Samsung goes after HTC deal to undercut Apple

Reuters Staff

5 Min Read

By Dan Levine and Poornima Gupta

SAN FRANCISCO, Nov 16 (Reuters) - When Apple Inc and HTC Corp last week ended their worldwide legal battles with a 10-year patent licensing agreement, they declined to answer a critical question: whether all of Apple’s patents were covered by the deal.

It’s an enormously important issue for the broader smartphone patent wars. If all the Apple patents are included -including the “user experience” patents that the company has previously insisted it would not license - it could undermine the iPhone makers efforts to permanently ban the sale of products that copy its technology.

Samsung Electronics Co Ltd, which could face such a sales ban following a crushing jury verdict against it in August, asked a U.S. judge on Friday to force Apple to turn over a copy of the HTC agreement.

In a court filing, Samsung argued it is “almost certain” that the HTC deal covers some of the patents involved in its own litigation with Apple.

Representatives for Apple and Samsung could not immediately be reached for comment.

Judges are reluctant to block the sale of products if the dispute can be resolved via a licensing agreement. To secure an injunction against Samsung, Apple must show the copying of its technology caused irreparable harm and that money, by itself, is an inadequate remedy.

Ron Laurie, managing director of Inflexion Point Strategy and a veteran IP lawyer, said he found it very unlikely that HTC would agree to a settlement that did not include all the patents. HTC declined to comment.

If the deal did in fact include everything, Laurie and other legal experts said that would represent a very clear signal that Apple under CEO Tim Cook was taking a much different approach to patent issues than his predecessor, Steve Jobs.

Apple first sued HTC in March 2010, and has been litigating for more than two years against handset manufacturers who use Google’s Android operating system.

Apple co-founder Jobs promised to go “thermonuclear” on Android, and that threat has manifested in Apple’s repeated bids for court-imposed bans on the sale of its rivals’ phones.

Cook, on the other hand, has said he prefers to settle rather than litigate, if the terms are reasonable. But prior to this month, Apple showed little willingness to license its patents to an Android maker.

HOLY PATENTS

In August, a Northern California jury handed Apple a $1.05 billion verdict, finding that Samsung’s phones violated a series of Apple’s software and design patents.

Apple quickly asked U.S. District Judge Lucy Koh to impose a permanent sales ban on those Samsung phones, and a hearing is scheduled for next month in San Jose, California.

In a surprise announcement on Saturday, however, Apple and HTC announced a license agreement covering “current and future patents” at both companies. Specific terms are unknown, though analysts have speculated that HTC will pay Apple somewhere between $5 and $10 per phone.

Additionally, Apple and Google are discussing whether to arbitrate some patent claims which would put at least part of its global courtroom battle on hold, according to court documents filed on Thursday.

During the Samsung trial, Apple IP chief Boris Teksler said the company is generally willing to license many of its patents - except for those that cover what he called Apple’s “unique user experience” like touchscreen functionality and design.

However, Teksler acknowledged that Apple has, on a few occasions, licensed those holy patents - most notably to Microsoft, which signed an anti-cloning agreement as part of the deal.

In opposing Apple’s injunction request last month, Samsung said Apple’s willingness to license at all shows money should be sufficient compensation, court documents show.

Apple has already licensed at least one of the prized patents in the Samsung case to both Nokia and IBM . That fact was confidential until late last year, when the court mistakenly released a ruling with details that should have been hidden from public view.

In a court filing last week, Apple argued that its Nokia, IBM and Microsoft deals shouldn’t stand in the way of an injunction. Microsoft’s license only covers Apple patents filed before 2002, and IBM signed several years before the iPhone launched, according to Apple.

“IBM’s agreement is a cross license with a party that does not market smartphones,” Apple wrote.

Apple’s seeming shift away from Jobs-style war, and toward licensing, may also reflect a realization that injunctions have become harder to obtain for a variety of reasons.

Colleen Chien, a professor at Santa Clara Law in Silicon Valley, said an appellate ruling last month that tossed Apple’s pretrial injunction against the Samsung Nexus phone raised the legal standard for everyone.

“The ability of technology companies to get injunctions on big products based on small inventions, unless the inventions drive consumer’s demand, has been whittled away significantly,” Chien said.

The case in U.S. District Court, Northern District of California is Apple Inc v. Samsung Electronics Co Ltd et al, 11-1846.